Short-seller Hindenburg Research recently published a report in which it accused server maker Super Micro Computer of “accounting manipulation.” As a result, Super Micro’s shares dropped by 2.6% on Tuesday.
In the report, Hindenburg said it conducted a three-month investigation that included interviews with former senior employees. The investigation allegedly revealed “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.”
Hindenburg also points out that Super Micro was already accused of “widespread accounting violations” by the U.S. Securities and Exchange Commission (SEC) and paid $17.5 million to settle these accusations. Apparently, many of the top executives who were involved in misconduct and fired were later re-hired.
“Even after the SEC settlement, pressure to meet quotas pushed salespeople to stuff the channel with distributors using “partial shipments” or by shipping defective products around quarter-end, per our interviews with former employees and customers,” the report states.
Super Micro has been one of the major beneficiaries of the recent artificial intelligence (AI) boom. The company makes servers that run AI software and has seen robust demand for its products lately, causing its stock to surge.
Super Micro’s stock was up by more than 300% early in the year, reaching $1,188 per share at one point in March. It later came back closer to Earth, dropping to its current price of $547.64, but still remains 92% up year-to-date.